Bunge remained upbeat on prospects for China's soybean
crushing margins, despite signalling some delay in their recovery, with the
curbs on imports of US distillers' grains adding to reasons to expect a revival.

Soren Schroder, the Bunge chief executive, who in May
forecast that the April-to-May period would be a "transition" quarter for
Chinese soybean processing margins, acknowledged that they in fact "remain weak".

Indeed, the US-based group, one of the world's biggest oilseed
processors, had seen "admittedly a very negative crush environment in the first
half of the year", he said.

"Our crush volumes… were clearly down," he added.

'Improving situation'

However, "I think we are clearly in [an] improving situation",
Mr Schroder said, with margin prospects boosted by recovering profitability
among Chinese livestock producers at a time when soybean supplies have been
swollen by a record quarter for imports in the April-to-June period.

"Underlying fundamental demand for proteins in China is
strong. Livestock profitability is back in positive territory and offtake [prospects
are] very strong."

Rabobank last week forecast a "strong" recovery in prices of
pork, China's staple meat, from later in the July-to-September quarter, lifted by
the arrival of the high season for demand at a time when herd numbers are low.

China's hog herd, by far the world's biggest, was 4.4% lower
in May than a year before, with sow inventories down 7.5%, indicating weak
potential for rebuilding the herd.

Prospects for China's pork producers "are turning positive"
after a "very difficult" first half of 2014, the bank said.

'Positive element'

China's, effective, ban on imports of US distillers' grains
(DDGs), through demanding that supplies be certified free of a genetically
modified Syngenta corn variety, adds an extra support to margins.

DDGs, a byproduct of corn ethanol manufacture, offer an
alternative to soymeal as a high protein feed ingredient.

"Clearly, the reduction in [Chinese] DDG imports, if that
continues, will be to the benefit of soymeal [demand]," Mr Schroder told
investors.

"So that will be a positive element as well" for crushing
margins.

It now appeared that, for margins, the current
July-to-September quarter would "be a transition, the fourth quarter should be
good and, in all likelihood, we would have a good first quarter [2015] as well
in China".

'Cheapest origin'

However, Mr Schroder - speaking after Bunge unveiled
forecast-beating profits, sending its shares soaring – had some consolation for
US soy processors, now facing growing competition for soymeal from domestic DDG
supplies swollen by the lack of exports to China.

While the dynamic "will have most likely a negative impact
on soymeal domestic consumption… on the other side, the US is the cheapest
origin for soymeal exports in the world.

"We do expect a record October/March shipment programme out
of the US."

The US sold 707,400 tonnes of soymeal for export last week
for 2014-15, which starts in October for the feed ingredient, taking total
commitments to 3.66m tonnes.

A year ago, the US had, for export, sold 1.45m tonnes of
soymeal forward.